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Waller: The Signaling Value of the Summary of Economic Projections
federalreserve.gov ·
Thank you to the Central Bank of T�rkiye for the opportunity to speak to you. I look forward today to hearing perspectives on the global economy and T�rkiye's role in it, but I thought the most constructive use I can make of the valuable time you have granted me is to offer a brief update on the U.S. economy and then offer some thoughts on central bank communication. As you know, in September the Federal Open Market Committee (FOMC) voted to raise our policy rate 25 basis points to 3.75 percent to 4 percent after nine months during which we held it steady. When monetary policy changes in this fashion, one question that most people ask is, what comes next? And I promise that I will do my best to answer that today, but first I will address another question raised by this shift in policy, which is, what changed? Was there new evidence, or did my thinking about the economy change? It turns out that the answer to this second question has a lot to do with the first one—about where policy goes from here. I have mentioned that last month's increase in the federal funds rate came after nine months of holding it steady. When I ask "What changed?" I am obviously asking what changed in the seven weeks between July 29, when the FOMC voted to hold rates steady, and September 16, when we raised them. But I am also asking about what changed from the second half of 2025, when the FOMC reduced rates 75 basis points over three successive meetings. While it might seem to some that monetary policy has turned on a dime, or on one or two data points, in my case my decision last month was the culmination of factors that developed over the past year, and I would like to describe them. When the FOMC cut rates fro Feds Waller: More Hikes Needed But Flexible About The Pace; Hikes Do Not Need To Come At Consecutive Meetings - Inflation Too High - Evidence That Economy Is Strengthening In The Second Half - Labor Market "Solid And Stable" In September